# INSTITUTIONAL SECURITIES CORPORATION X-17A-5 (2024-02-28) — Broker-dealer annual report - Company: INSTITUTIONAL SECURITIES CORPORATION - Form: X-17A-5 - Filed: 2024-02-28 - Period: 2023-12-31 - Accession: 0000818043-24-000001 - CIK: 818043 - File #: 8-38158 - Type: Broker-dealer - Material weakness: No - Auditor: Sanville & Company, LLC - Auditor location: Dallas, TX - Contact: Andreya Weadon - Phone: (214)520-1115 - Email: shayes@iscgroup.com - Website: iscgroup.com - Signed by: Scott A. Hayes (President) Original filing: https://www.sec.gov/Archives/edgar/data/818043/000081804324000001/2023FinancialsCIK0000818043.pdf --- {0}------------------------------------------------ OMB APPROVAL **UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549** OMB Number:3235-0123 Expires: Nov. 30, 2026 Estimated average burden hours per response: 12 > SEC RUE JSIUMBEUS 8-38158 # **ANNUAL REPORTS FORM X-17A-5 PART III** **FACING PAGE** **Information Required Pursuant to Rules 17a-5, 17a-12, and 18a-7 under the Securities Exchange Act of 1934** 01/01/23 12/31/23 AND ENDING FILING FOR THE PERIOD BEGINNING MM MM/DD/YY /DD/YY **A.REGISTRANT IDENTIFICATION** # Institutional Securities Corporation NAME OF FIRM: TYPE OF REGISTRANT (check all applicable boxes): H Broker-dealer Security-based swap dealer Major security-based swap participant Check here if respondent is also an OTC derivatives dealer ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.) # 3500 Oak Lawn Ave., Suite 400 | | | (No. and Street) | | | | | |--------------------------------------------------|---------------|-----------------------------------------------------------|-----------------|-------------------------------------------|--|--| | Dallas | | Texas | | 75219
(Zip Code) | | | | (City) | | (State) | | | | | | PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | | | | | Hayes
Scott | | 214-520-1115 | | shayes@iscgroup.com | | | | (Name) | | (Area Code -Telephone Number) | (Email Address) | | | | | | B. | ACCOUNTANT IDENTIFICATION | | | | | | Company
&
Sanville | LLC
, | (Name -if individual, state last, first, and middle name) | | | | | | St
Paul
North
Saint
325 | 3100
Suite | Dallas | TX | 75201 | | | | (Address) | | (City) | (State) | (Zip Code) | | | | 09/18/2003 | | | 169 | | | | | (Date of Registration with PCAOB)(if applicable) | | | | (PCAQB Registration Number,if applicable) | | | | | | FOR OFFICIAL USE ONLY | | | | | | | | | | | | | | | | | | | | | \* Claims for exemption from the requirement that the annual reports be covered by the reports of an independent public accountant must be supported by a statement of facts and circumstances relied on as the basis of the exemption. See 17 CFR 240.17a-5(e)(l)(ii),if applicable. **Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.** {1}------------------------------------------------ ## **OATH OR AFFIRMATION** Scott Hayes , swear (or affirm) that, to the best of my knowledge and belief, the ' , as of ,is true and correct. I further swear (or affirm) that neither the company nor any financial report pertaining to the firm of Institutional Securities Corporation 12/31 **, 2 023** partner,officer, director, or equivalent person, as the case may be, has any proprietary interest in any account classified solely as that of a customer. ![](_page_1_Picture_5.jpeg) ![](_page_1_Picture_6.jpeg) | Signature: | i/> | | |------------|-----|--| | Title: | | | | | | | ## **This filing\*\* contains (check all applicable boxes):** - H(a) Statement of financial condition. - (b) Notes to consolidated statement of financial condition. - S (c) Statement of income (loss) or,if there is other comprehensive income in the period(s) presented, a statement of comprehensive income (as defined in § 210.1-02 of Regulation S-X). - S (d) Statement of cash flows. - S (e) Statement of changes in stockholders' or partners' or sole proprietor's equity. - (f) Statement of changes in liabilities subordinated to claims of creditors. - **B**(g) Notes to consolidated financial statements. - S (h) Computation of net capital under 17 CFR 240.15c3-lor 17 CFR 240.18a-l, as applicable. - (i) Computation of tangible net worth under 17 CFR 240.18a-2. - H(j) Computation for determination of customer reserve requirements pursuant to Exhibit A to 17 CFR 240.15c3-3. - (k) Computation for determination of security-based swap reserve requirements pursuant to Exhibit B to 17 CFR 240.15c3-3 or Exhibit A to 17 CFR 240.18a-4, as applicable. - (I) Computation for Determination of PAB Requirements under Exhibit A to § 240.15c3-3. - H(m) Information relating to possession or control requirements for customers under 17 CFR 240.15c3-3. - (n) Information relating to possession or control requirements for security-based swap customers under 17 CFR 240.15c3-3(p)(2) or 17 CFR 240.18a-4, as applicable. - H (o) Reconciliations, including appropriate explanations,of the FOCUS Report with computation of net capital or tangible net worth under 17 CFR 240.15c3-l,17 CFR 240.18a-l,or 17 CFR 240.18a-2, as applicable,and the reserve requirements under 17 CFR 240.15c3-3 or 17 CFR 240.18a-4, as applicable,if material differences exist,or a statement that no material differences exist. - (p) Summary of financial data for subsidiaries not consolidated in the statement of financial condition. - **B**(q) Oath or affirmation in accordance with 17 CFR 240.17a-5,17 CFR 240.17a-12,or 17 CFR 240.18a-7, as applicable. - (r) Compliance report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - H(s) Exemption report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - (t) Independent public accountant's report based on an examination of the statement of financial condition. - **B** (u) Independent public accountant's report based on an examination of the financial report or financial statements under 17 CFR 240.17a-5, 17 CFR 240.18a-7, or 17 CFR 240.17a-12, as applicable. - (v) Independent public accountant's report based on an examination of certain statements in the compliance report under 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - **B** (w) Independent public accountant's report based on a review of the exemption report under 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - (x) Supplemental reports on applying agreed-upon procedures,in accordance with 17 CFR 240.15c3-le or 17 CFR 240.17a-12, as applicable. - (y ) Report describing any material inadequacies found to exist or found to have existed since the date of the previous audit, or a statement that no material inadequacies exist, under 17 CFR 240.17a-12(k). - (z) Other: - *\*\*To request confidential treatment of certain portions of this filing, see 17 CFR 240.17a-5(e)(3) or 17 CFR 240.18a-7(d)(2), as applicable.* {2}------------------------------------------------ #### **Institutional Securities Corporation** Report Pursuant to Rule 17a-5(d) For the Year Ended December 31, 2023 {3}------------------------------------------------ ![](_page_3_Picture_0.jpeg) #### **Report of Independent Registered Public Accounting Firm** To the Board of Directors and Those Charged With Governance of Institutional Securities Corporation #### **Opinion on the Financial Statements** We have audited the accompanying statement of financial condition of Institutional Securities Corporation (the Company) as of December 31, 2023. the related statements of operations, changes in stockholder's equity, and cash flows for the year then ended, and the related notes to the financial statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. #### **Basis for Opinion** These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion, #### **Supplemental Information** The supplementary information contained in The Schedule I, Computation of Net Capital Under SEC Rule 15c3-1, Schedule II, Computation for Determination of Reserve Requirements Under Rule SEC 15c3\*3 and Schedule III. Information Relating to the Possession or Control Requirements Under SEC Rule 15c3-3 have been subjected to audit procedures performed in conjunction with the audit of the Company's financial statements. The supplemental information is the responsibility of the Company's management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental information In forming our opinion on the supplemental information, we evaluated whether the supplemental information, including its form and content, is presented in conformity with 17 C.F.R. §240.17a-5. In our opinion, the supplementary information contained in the Schedule I, Computation of Net Capital Under SEC Rule 15c3\*1, Schedule II, Computation for Determination of Reserve Requirements Under SEC Rule 15c3-3 and Schedule III, Information Relating to the Possession or Control Requirements Under SEC Rule 15c3-3 are fairly stated, in all material respects, in relation to the financial statements as a whole. We have served as the Company's auditor since 2021. Dallas, Texas February 21, 2024 > 325 North Saint Paul Street Suite 3100 Dallas, Texas 75201 214.738.1998 {4}------------------------------------------------ ## INSTITUTIONAL SECURITIES CORPORATION Statement of Financial Condition December 31, 2023 #### **ASSETS** | Cash
and cash equivalents | \$ | 454,958 | |--------------------------------------------------------|----|-----------| | from
broker-dealers
and
Receivable | | 1,204,460 | | clearing organizations | | 71,872 | | receivables
Other | | 49,357 | | owned, at fair value
Securities | | 48.492 | | expenses and
Prepaid
advances | | | | Assets
Total | S | 1 829.139 | | STOCKHOLDER'S
EQUITY
LIABILITIES
AND | | | | Liabilities: | | | | Accounts payable and accrued
expenses | \$ | 4,641 | | Commissions payable | | 564,979 | | clearing
broker
Accounts payable | | 47,002 | | income tax payable
State | | 6,600 | | charges
Deferred clearing | | 104,167 | | | | 727,389 | | Stockholder's
equity: | | | | 10,000 shares
Common stock, | | | | \$.10
par value,
authorized
with | | | | outstanding
10,000 shares issued
and | | 1,000 | | capital
Additional
paid
in | | 286,709 | | Retained
earnings | | 814,041 | | stockholder's
equity
Total | | 1.101.750 | | stockholder's
equity
liabilities
and
Total | S | 1.829 139 | {5}------------------------------------------------ ## INSTITUTIONAL SECURITIES CORPORATION Statement of Operations For the Year Ended December 31, 2023 | Revenues
Commissions
annuity products
Insurance and
fees/distribution
fees
12b1
Interest income
income
Other
Riskless principal
Total
revenues | \$
823,639
1,988,993
1,499,693
1,296,400
64,306
5,726,365
11.399.396 | |-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------| | Expenses
and
clearance
Commissions
Compensation and benefits
communications
Technology and
Professional
fees
Occupancy
General and administrative
Regulatory fees
and
expenses | 4,405,363
4,564,325
301,650
92,854
148,579
1,301,770
85,410 | | Total
expenses | 10.899.951 | | Net income before
income taxes | 499,445 | | Federal
income tax expense | (103.824) | | Net
income | 395.621
S | {6}------------------------------------------------ ## INSTITUTIONAL SECURITIES CORPORATION Statement of Changes in Stxkholder's Equity For the Year Ended December 31, 2023 | | Shares | | Common
Stock | | Additional
Paid
In
Capital | | Retained
Earnings | | Total | |---------------------------------|--------|----|-----------------|----|-------------------------------------|---|----------------------|---|-------------| | Balance at
December 31, 2022 | 10,000 | \$ | 1,000 | \$ | 286,709 | S | 418,420 | S | 706,129 | | Net income | | | | | | | 395.621 | | 395.621 | | Balance at
December 31, 2023 | 10.000 | S | 1 000 | S | 286 709 | S | 814.041 | | S 1.101 750 | {7}------------------------------------------------ ## INSTITUTIONAL SECURITIES CORPORATION Statement of Cash Flows For the Year Ended December 31, 2023 | activities
operating
Cash flows from | | | |-----------------------------------------------------------------|----|-----------| | Net
income | \$ | 395,621 | | net income to net cash
Adjustments to reconcile | | | | by operating activities:
(used)
provided | | | | liabilities:
in current assets and
Change | | | | and
from
broker-dealers
Decrease in receivable | | 180,695 | | clearing organizations | | 399,437 | | owned
Decrease in securities | | (5,810) | | Increase in prepaid expenses
other receivables | | (50,318) | | in
Increase
Increase in accounts payable and
accrued | | 285 | | expenses
payable
Decrease in commissions | | (529,173) | | to clearing broker
accounts payable
Decrease in | | (400,672) | | Decrease in deferred
revenue | | (25,000) | | | | | | operating activities
by
provided
(used)
Net
cash | | (34,935) | | activities
investing
Cash flows from | | | | investing activities
by
(used)
Net
cash provided | | -0- | | from financing activities
Cash
flows | | | | financing activities
(used)
by
cash
provided
Net | | -0- | | | | | | equivalents
decrease in cash
and cash
Net | | (34,935) | | equivalents at beginning of
Cash
and cash
year | | 489,893 | | equivalents at end
of
Cash
and
cash
year | S | 454.958 | | | | | | Cash
Flow Information
Supplemental Schedule of | | | | year for:
paid during the
Cash | | | | Interest | £ | -0- | | | S | 103.824 | | Income
taxes | | | {8}------------------------------------------------ ## Note 1 - Summary of Significant Accounting Policies Institutional Securities Corporation (the "Company") is a broker-dealer in securities registered with the Securities and Exchange Commission ("SEC") and is a member of the Financial Industry Regulatory Authority ("FINRA"). The Company operates under (SEC) Rule 15c3-3(k)(2)(ii), which provides that all funds and securities belonging to the Company's customers would be handled by a clearing broker-dealer. The Company is a Texas corporation that is a wholly-owned subsidiary of ISC Group, Inc. ("Parent"). Substantially all the Company's business is conducted with customers in Texas. ## Commission Revenue Commission revenue represents sales commissions generated by registered representatives for their clients' purchases and sales of securities on exchanges and over-the-counter, as well as purchases of other investment products. The Company views the selling, distribution and marketing, or any combination thereof, of investment products to such clients as a single performance obligation to the product sponsors and clearing firm. Security transactions are recorded on a trade date basis. The Company is the principal for commission revenue, as it is responsible for the execution of the clients' purchases and sales and maintains relationships with the product sponsors and clearing firm. Registered Representatives assist the Company in performing its obligations. Accordingly, total commission revenues are reported on a gross basis. ## 12b1 Fees/Distribution Fees, Mutual Funds, Insurance and Annuity Products The Company earns revenue for selling mutual funds, fixed and variable annuities and insurance products. The performance obligation is satisfied at the time of each individual sale. A portion of the revenue is based on a fixed rate applied, as a percentage, to amounts invested at the time of sale. The remaining revenue is recognized over the time the client owns the investment or holds the contract and is generally earned based on a fixed rate applied, as a percentage, to the net asset value of the fund, or the value of the insurance policy or annuity contract. The future anticipated revenue is not recognized at the time of sale because it is variably constrained due to factors outside the Company's control, including market volatility and client behavior (such as how long clients hold their mutual fund investment, insurance policy, or annuity contract). The revenue is not recognized until it is probable that a significant reversal will not occur. ## Riskless Principal and Trading Gains and Losses The Company buys and sells securities on behalf of its customers and on behalf of the Company. Each time a transaction is executed, the Company recognizes a gain or loss. This gain or loss is then recorded in the books of the Company. The Company believes that the performance obligation is satisfied on the trade date because that is when the underlying financial instrument or purchaser is identified, the pricing is agreed upon and the risks and rewards of ownership have been transferred to/from customer. The economic conditions which affect the Company's operations are related to overall trends in the economy and trends in interest rates which affect the Company's fixed income positions. Securities owned and securities sold short, not yet purchased, are carried at fair value. The increase or decrease in net unrealized appreciation or depreciation of securities is credited or charged to operations. For purposes of reporting cash flows, the Company has defined cash equivalents as highly liquid investments with original maturities of less than ninety days that are not held for sale in the ordinary course of business. Receivables from broker-dealers and clearing organizations are generally collected in full in the month following their accrual. As such, management has not recorded an allowance for credit losses on these receivables. The {9}------------------------------------------------ ## Note 1 - Summary of Significant Accounting Policies - continued Company advances funds to its registered representatives as determined necessary by management. The advances are generally recouped upon the following commission payment cycle. The Company takes into consideration the composition of the receivables, current economic conditions, the estimated net realizable value of the underlying collateral, historical loss experience, delinquency, and bankrupt accounts when determining management's estimate of probable credit losses and the adequacy of the allowance for credit losses. Any receivables deemed uncollectible are written off against the allowance. The Company had receivables related to contracts with customers of \$1,204,460 as of December 31, 2023. Compensated absences have not been accrued because the amount cannot be reasonably estimated. For the year ended December 31, 2023, the Company has provided for income taxes as if it were a standalone taxpayer. However, because the Company is not required to settle any tax liability, benefit or credit resulting from its separate tax position with the Parent, all tax liabilities or recoverables accrued by the Company are deemed settled byway of a capital contribution or capital distribution by or to the Parent. Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related primarily to differences between the basis of assets and liabilities for financial and income tax reporting. Deferred tax asset and liabilities represent future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes are also recognized for operating losses that are available to offset future taxable income, subject to a valuation allowance. Tax benefits associated with uncertain tax positions are recognized in the period in which one of the following conditions is satisfied: 1) the more likely than not recognition threshold is satisfied; 2) the position is ultimately settled through negotiation or litigation; or 3) the statute of limitations for the taxing authority to examine and challenge the position has expired. Tax benefits associated with an uncertain tax position are derecognizedin the period in which the more likely than not recognition threshold is no longer satisfied. Any potential interest and penalty associated with tax contingency, should one arise, would be included as a component of income tax expense in the period in which the assessment arises. The Company's income tax returns are subject to examination by over the statues of limitations, generally three years form the date of filing. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. ## Note 2 - Net Capital Requirements Pursuant to the net capital provisions of Rule 15c3-1 of the Securities Exchange Act of 1934, the Company is required to maintain a minimum net capital, as defined under such provisions. Net capital and the related net capital ratio may fluctuate on a daily basis. As of December 31, 2023, the Company had net capital of approximately \$963,979 and net capital requirements of \$100,000. The Company's ratio of aggregate indebtedness to net capital was 0.71 to 1. The Securities and Exchange Commission permits a ratio of no greater than 15 to 1. {10}------------------------------------------------ #### Note 3 -Possession or Control Requirements The Company does not carry customer accounts or otherwise hold customer funds. The Company is exempt from the provision of Rule 15c3-3 under the Securities Exchange Act of 1934 as the Company's activities are limited to those set forth in the conditions for exempt appearing in paragraph (k)(2)(ii) of Rule 15c3-3 and otherwise limits its business activities to effecting securities transactions via subscription way basis where the funds are payable to the issuer or its agent and not to the Company and participating in distributions of securities in accordance with the requirements of paragraphs (a) or (b)(2) of Rule 15c2-4. ## Note 4 - Related Party Transactions The Company and various entities are under common control and the existence of that control creates operating results and financial position significantly different than if the companies were autonomous. The Parent has agreed to furnish management services, office space, and various general and administrative expenses to the Company. Amounts incurred under this agreement for the year ended December 31, 2023, totaled \$1,865,000 and are reflected in commission and clearance and other expenses. In addition, The Company made payments to an affiliated entity, Investment Sales Corp., for the year ended December 31, 2023, totaling \$345,047. These payments comprised of fees that were paid to the broker dealer for plan administration activities carried out by the affiliated entity and for life insurance policies sold by representatives in the capacity as an insurance agent by the affiliated entity, Investment Sales Corp. The Company additionally transferred fixed annuity commissions asof December 31, 2023 to Investment Sales Corp to facilitate the payment of those commissions for a total amount of \$4,527. The Company also made payments to an affiliated entity, ISC Advisors, Inc., for the year ended December 31, 2023 totaling \$19,175. These payments comprised advisory fees that were received into the broker dealer in error and also E&O insurance premiums withheld from commissions. The premiums for the corporate E&O policy are paid by the affiliate, ISC Advisors, Inc. These payments are reflected in commission and clearance and other expenses. ## Note 5 - Concentration Risk At various times throughout the year, the Company had cash balances in excess of federally insured limits. #### Note 6 - Fair Value Measurements In determining fair value,the Company uses various methods including market,income, and cost approaches. Based on these approaches, the Company often utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable inputs. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Based on the observability of the inputs used in the valuation techniques the Company is required to provide the following information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories: Level 1 - Valuations for assets and liabilities traded in active exchange markets, such as the New York Stock Exchange. Level 1 also includes U.S. Treasury and federal agency securities and federal agency {11}------------------------------------------------ #### Note 6 - Fair Value Measurements-continued mortgage-backed securities, which are traded by dealers or brokers in active markets. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities. Level 2 - Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third party pricing services for identical or similar assets or liabilities. Level 3 - Valuations for assets and liabilities that are derived from other valuation methodologies, including option pricing models, discounted cash flow models and similar techniques, and not based on market exchange, dealer, or broker traded transactions. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities. For the year ended December 31, 2023, the application of valuation techniques applied to similar assets and liabilities has been consistent. The fair value of securities owned is deemed to be Level 2 investments. There were no transfers into or out of Level 1, 2, or 3 categories in the fair value hierarchy for the year ended December 31, 2023. State and municipal obligations and corporate bonds consist of debt securities that are valued based on quotations received from dealers who make markets in such securities or by independent pricing services. These pricing services generally utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices. The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on recurring basis as of December 31, 2023. | Security | Total | | Level 1 | | Level 2 | | Level
3 | | |-----------------------|-------|--------|---------|--|---------|---------|------------|--| | Corporate Bonds | \$ | 15,198 | \$ | | \$ | 15,198 | \$ | | | Municipal Obligations | | 34,159 | | | _ | 34, 159 | | | | Total | \$ | 49,357 | _
\$ | | \$ | 49,357 | \$ | | #### Note 7 - Commitment and Contingencies Included in the Company's clearing agreement with its clearing broker-dealer, is an indemnification clause. This clause relates to instances where the Company's customers fail to settle security transactions. In the event this occurs, the Company will indemnify the clearing broker-dealer to the extent of the net loss on the unsettled trade. As ofDecember 31, 2023, management of the Company had not been notified by the clearing broker-dealer, nor were they otherwise aware, of any potential losses relating to this indemnification. Also included in the Company's agreement with its clearing broker-dealer is a clause in which the Company represents that it shall maintain at all times a minimum of \$250,000 in regulatory net capital. The clause requires the Company to do cease introducing any business in alternative investment products through its clearing firm in the event the Company's capital falls below \$250,000. The Company engages in short selling activities; it borrows securities and sells them to third parties, Until the Company covers its short position it is exposed to market risk to the extent that subsequent market fluctuation may require purchasing securities sold short at prices that may be significantly higherthan the fair value reflected in financial statements. At December 31, 2023, the Company did not have any securities sold short. {12}------------------------------------------------ Supplementary Information Pursuant to Rule 17a-5 of the Securities and Exchange Act of 1934 For the Year Ended December 31, 2023 {13}------------------------------------------------ ## **Schedule I** ## INSTITUTIONAL SECURITIES CORPORATION Computation of Net Capital Under Rule 15c3-1 of the Securities and Exchange Commission As of December 31.2023 ## **COMPUTATION OF NET CAPITAL** | net capital
stockholder's equity qualified for
Total | | \$1,101,750 | |------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------|-------------------------------------------| | Add:
credits
Other deductions or allowable | | -0- | | subordinated
liabilities
allowable
capital and
Total | | 1,101,750 | | Deductions and/or
charges
Non-allowable assets:
the payable
excess of
Concession receivable in
Other receivables
Prepaid expenses and
advances | \$
13,187
71,872
48,492 | 133,551 | | positions
before haircuts on securities
capital
Net | | 968,199 | | where applicable,
(computed,
Haircuts on securities
15c3-1(c)(2))
pursuant to Rule
Other securities | 4,220 | 4,220 | | Net capital | | S
963.979 | | INDEBTEDNESS
AGGREGATE | | | | financial condition
in statement of
Items included | | | | accrued expenses
Accounts payable
and
Commissions payable
taxes payable
State
clearing charges
Deferred | | S
4,641
564,979
6,600
104,167 | | aggregate indebtedness
Total | | S 680.387 | {14}------------------------------------------------ ## **Schedule I (continued)** ## INSTITUTIONAL SECURITIES CORPORATION Computation of Net Capital Under Rule 15c3-1 of the Securities and Exchange Commission As of December 31, 2023 ## **COMPUTATION OF BASIC NET CAPITAL REQUIREMENT** | of
total
(6
2/3%
Minimum net capital
required
aggregate indebtedness) | \$ | 45.359 | |-----------------------------------------------------------------------------------------|----|-----------| | requirement of
net capital
Minimum dollar
reporting broker
or dealer | | | | requirement (greater of
above two
Net capital
minimum requirement amounts) | S | 100.000 | | required
minimum
in excess of
Net capital | S | 863.979 | | Excess net capital at 1000% | | S 843.979 | | Ratio: Aggregate indebtedness to net capital | | .71 to 1 | ## **RECONCILIATION WITH COMPANY'S COMPUTATION** There were no material differences in the computation of net capital under Rule 15c3-1 from the Company's computation in its unaudited Focus IIA Report. {15}------------------------------------------------ ## **Schedule II & III** ## INSTITUTIONAL SECURITIES CORPORATION Computation For Determination Of Reserve Requirements And Information Relating To Possession Or Control Requirements Under Rule 15c3-3 ofthe Securities and Exchange Commission December 31, 2023 The Company is exempt from Securities Exchange Commission (''SEC'') Rule 15c3-3 pursuant to both the exemptive provisions of subparagraph (k)(2)(ii) and is considered a "Non-Covered Firm" from 15c3-3 by relying on footnote 74 to SEC Release 34-70073 and therefore,is not required to maintain a "Special reserve bank account for the Exclusive benefit of customers." {16}------------------------------------------------ ## REVIEW REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON MANAGEMENT'S EXEMPTION REPORT Required by SEC Rule 17a-5 Year Ended December 31, 2023 {17}------------------------------------------------ ![](_page_17_Picture_0.jpeg) ## **Report of Independent Registered Public Accounting Firm** To the Board of Directors and Those Charged With Governance of Institutional Securities Corporation We have reviewed management's statements, included in the accompanying Exemption Report, in which Institutional Securities Corporation (the Company) stated that: - 1. The Company identified the following provisions of 17 C.F.R. § 240.15c3-3(k) under which the Company claimed an exemption from 17 C.F.R. § 240 15c3-3: Paragraph (k)(2)(ii) (the exemption provisions), and the Company stated that it met the identified exemption provisions throughout the most recent fiscal year without exception; - 2. The Company is also filing this Exemption Report because the Company's other business activities contemplated by Footnote 74 of the SEC Release No. 34-70073 adopting amendments to 17 C.F.R. § 240.17a-5 are limited to (1) acting as a mutual fund retailer (2) broker or dealer selling variable life insurance or annuities (3) broker or dealer selling tax shelters or limited partnerships in primary distributions (4) private placements (5) the private placement of securities including real estate investment trust ("REIT") and structured products throughout the most recent fiscal year; and - 3. The Company (1) did not directly or indirectly receive, hold, or otherwise owe funds or securities for or to customers (other than money or other consideration received and promptly transmitted in compliance with paragraph (a) or (b)(2) of 17 C.F.R. § 240.15c2-4; (2) did not carry accounts of or for customers; and (3) did not carry proprietary accounts of broker-dealers (as defined in 17 C.F.R. § 240.15c3-3), throughout the most recent fiscal year without exception. The Company's management is responsible for its statements. Our review was conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States) and, accordingly, included inquiries and other required procedures to obtain evidence about the Company's compliance with the exemption provisions and that the Company's other business activities were limited to (1) acting as a mutual fund retailer (2) broker or dealer selling variable life insurance or annuities (3) broker or dealer selling tax shelters or limited partnerships in primary distributions (4) private placements (5) the private placement of securities including real estate investment trust ("REIT") and structured products and (1) did not directly or indirectly receive, hold, or otherwise owe funds or securities for or to customers (other than money or other consideration received and promptly transmitted in compliance with paragraph (a) or (b)(2) of 17 C.F.R. § 240.15c2-4; (2) did not carry accounts of or for customers; and (3) did not carry proprietary accounts of brokerdealers (as defined in 17 C.F.R. § 240 15c3-3) throughout the most recent fiscal year without exception. A review is substantially less in scope than an examination, the objective of which is the expression of an opinion on management's statements. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to management's statements referred to above for them to be fairly stated, in ail material respects, based on the provisions set forth in 17 C.F.R. § 240.15c3-3 and 17 C.F.R. § 240.17a-5. Dallas, Texas February 21, 2024 325 North Saint Paul Street Suite 3100 Dallas, Texas 75201 214.738.1998 {18}------------------------------------------------ #### **Institutional Securities** *Corporation* **Exemption Report** hs' trjonal Securi:ies Ccrocratrcn (the **'Company\*)** is a registered broker-dealer s oject **to** Rule 17a-5 proTjIgated oy the Secortes anc Excharge Conrrr.isson ("7 C r .R §24C.17a-5, Rebels to be Tace by certan brokers ard dealers') Tr s Exemption Repcr was brebarec as requ red by 17 C r .R. §24C.17a-5(d)(1> anc (4) To the best of i:s 17 C.F.R §24Q.15c3-3 under the following provisions cf17 C.F.R §240.15c3-3(k)(2){ii). - (2) The Company met the identified exemption provisions in 17 C.F R.§240.15c3-3(k)throughout the most recent fiscal year without exception. - (3) Tne Compary is considerec 'Non-Ccverec nr' exempt from 17 C..FR §240 15c3-3 and is fiing an Exemplio0 Retort relyirg or fcctrote 74 to SEC Release 34-70073, and as discussed n GSA 6 cf the related FAQ issued by the SEC staff. Tne Company limits his business activities exclusively to:(1) acting as a mutual fund retailer (2) broker or dealer sealing variable fife Insurance or annuities (3) broker or dealer selling fax shelters or limited partnerships in primary distributions (4) private placements (5) the private placement of securities including real estateinvestment trust( \*RBT} and structured products. - (4) The Company (1) did not d rectiy cr ind rectly receive, nold or otherwise owe funds or secures ' ' or or to customers, other ban money cr otner consioereticn received and prompt y transmitted r ccmp iarce with paragraph (a) *or* (b)(2) cf Rule 1&2-4;(2) did not carry accounts cf or for customers, and (3) a a not carry PAB accounts (as ae' inea in Rule 15c3-3), throughout the most recert fiscal year without exception. I, Scott Hayes, swear (or affirm) that, to mybestknowledge and belief, this exemption report is true and correct. DoncsrHe i ityai Presideni Date of Report February 12, 2024 Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.